A box of the Fentanyl-based drug Subsys, made by Insys Therapeutics Inc, is seen in an undated photograph provided by the U.S. Attorney's Office for the Southern District of Alabama.

Laundering tactics used by fentanyl traffickers exhibit certain "unique characteristics," while otherwise mimicking the methods used by "low-level" drug dealers, the Financial Transactions and Reports Analysis Centre (FINTRAC) said in an operational alert issued last week(here).

Traffickers procure fentanyl and its precursors “mainly [from] China,” using wire transfers, money orders, and occasionally virtual currency, FINTRAC noted, citing its analysis of financial data from Canadian firms and law enforcement agencies.

“Fentanyl and its analogues are typically smuggled into Canada through the postal system, prior to being distributed through networks in a small area surrounding the arrival point,” FINTRAC said. “The laundering of the proceeds of fentanyl trafficking in Canada generally takes place through Canadian banks, caisses populaires, and credit unions.”

— Client purchases wire transfers or money orders for amounts below the C$10,000 reporting threshold at multiple money services businesses over a short time period, normally with cash or prepaid credit cards. Typically, the wire transfers and money orders are sent by numerous, seemingly unconnected individuals in Canada to the identical recipients in China (in Wuhan, Zhuhai, Guangzhou, Xianju and Shanghai, in particular), Ukraine, and India.

— Client pays for wire transfers in Canadian funds, which are then received in even dollar amounts.

— Client deposits cash into an account and then immediately moves it via email money transfers, transfers between accounts, drafts or cheques, or withdraws it, often at multiple financial institutions.

— Client conducts significantly more email money transfers, generally for small amounts, than otherwise typical for a customer with the same profile.

— Client has funds coming into and out of their account via email money transfers more quickly than normal.

— Client receives payroll deposits that are inconsistent with their stated occupation, or multiple deposits that have no apparent purpose and are inconsistent with their employment or income.

— Client deposits cheques, such as those for governmental assistance payments, endorsed by third parties.

— Client frequently requests drafts payable to self or transfers funds to his or her accounts at other financial institutions.

— Client deals with firms that advertise pharmaceuticals, supplements, weight-loss medications, and related products. These firms’ transactions can—knowingly or unknowingly—be used to mask fentanyl trafficking, since they use packaging and shipping services similar to those in the fentanyl trade.

INDICATORS OF LAUNDERING OF THE PROCEEDS OF LOW-LEVEL DRUG TRAFFICKING

— Client makes transactions that are inconsistent with their employment or profile.

— Client is a commercial entity that engages in trade transactions for products that do not appear to fit its known business profile.

(Daniel Seleanu is a correspondent for Thomson Reuters Regulatory Intelligence in Toronto. Email Daniel at daniel.seleanu@thomsonreuters.com)

This article was produced by Thomson Reuters Regulatory Intelligence and initially posted on Feb. 1. Regulatory Intelligence provides a single source for regulatory news, analysis, rules and developments, with global coverage of more than 400 regulators and exchanges. Follow Regulatory Intelligence compliance news on Twitter: @thomsonreuters